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Credit Card Fraud & How To Avoid It?

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May 5, 2023


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Here’s a fun fact - as of FY21, around 62 million credit cards were used in India. If you own one or more of these cards, there are two things you should know the answer to -  what is credit card fraud? And how can you avoid falling prey to it?

Knowing the different types of credit card fraud can help protect your finances and ensure you don’t accidentally get charged for purchases you didn’t make. So, here’s a closer look at everything you need to know about credit card fraud and protecting your credit cards from fraudsters and cybercriminals. 

What is Credit Card Fraud? 

Credit card fraud is a type of cybercrime or financial crime where a fraudster gains access to sensitive information regarding your credit card. Such sensitive information includes your credit card number, PIN, CVV, and other similar details needed to use the card to make a purchase. 

Since the purchases made or the fund transfers initiated are illegal, they all constitute credit card fraud. Credit card fraud detection systems can help identify fraudulent transactions to a certain extent. But in most cases, fraudsters may have caused significant financial harm to the victim before they are caught. So, it is always a good idea to be aware of the different types of credit card fraud and what you can do to avoid falling prey to them. 

Signs of Credit Card Fraud

Signs of credit card fraud encompass unauthorized charges appearing on your statement, reporting a lost or stolen card, or receiving unfamiliar receipts from unknown merchants. 

Frequent transaction declines, especially for legitimate purchases, may indicate potential credit card fraud. Beware of unsolicited calls or emails requesting your card information, alterations in your monthly statements or the unexpected arrival of new cards you didn't request. Your bank might alert you to unusual activity, and multiple failed login attempts on your card account can signal a security breach and could be a sign of credit card fraud. 

Financial and Personal Consequences of Credit Card Fraud

Credit card fraud can have significant financial and personal consequences for the cardholder and the financial institution. Here are some of the potential consequences:

1. Credit Card Fraud Consequences for the Cardholder:

Unauthorised Charges

The cardholder may be liable for unauthorised charges up to a certain limit (usually a small amount) before reporting the fraud. If they don't report it promptly, they might be responsible for more of the fraudulent charges.

Financial Loss

In cases of extensive fraud, the cardholder may suffer financial losses, especially if the fraud goes undetected for an extended period.

Credit Score

Repercussions from unpaid fraudulent charges can negatively impact the cardholder's credit score. 

Legal Costs

Legal fees can add to the financial burden if the cardholder must dispute the charges in court.

Stress and Anxiety

Discovering credit card fraud can be stressful and anxiety-inducing, affecting the cardholder's emotional well-being.

Time and Effort

Resolving credit card fraud takes time and effort, including filing reports, working with the bank, and possibly disputing charges.

Identity Theft Risk

Credit card fraud can sometimes be a precursor to more extensive identity theft, with potentially severe personal and financial implications.

2. Credit Card Fraud Consequences for the Financial Institution:


Financial institutions may incur losses due to reimbursing cardholders for fraudulent charges.

Investigation and Prevention Costs

They need to invest in fraud detection and prevention systems, which can be expensive.

Reputation Damage

A high incidence of credit card fraud can harm a financial institution's reputation and erode customer trust.

Regulatory Scrutiny

Regulatory authorities may scrutinize the institution's security and anti-fraud measures, leading to potential fines or sanctions.

Types of Credit Card Fraud 

Credit card fraud may include different kinds of scams and cyber crimes like phishing, pagejacking, application fraud, and more. Let’s look closely at some common types of credit card fraud and discuss how to stay safe from such crimes. 

1. Phishing

Phishing is one of the most common types of credit card fraud that involves sending fake emails that look authentic. These emails prompt you to share sensitive information or click a link to make a seemingly urgent payment. For example, you may receive an email asking you to click a link to make your pending credit card bill immediately to avoid a massive penalty. The link, of course, will be fraudulent.

How to avoid falling victim to phishing?

This type of credit card fraud can be avoided by simply not clicking links or sharing financial information over your email. You can also install a trusted antivirus or security software on your computer for added protection. 

‍2. PoS Fraud

PoS credit card fraud occurs when you use a credit card to pay for a purchase at a PoS terminal. Here, scamsters use a skimming device attached to the PoS machine and hack your credit card information when transacting. These details can then be used to initiate unauthorised transactions using your credit card. 

How to avoid falling victim to PoS frauds?

To avoid falling prey to skimming attacks and credit card frauds at PoS terminals, ensure the device is not connected to any other suspicious machines. Also, use NFC payment options whenever possible, so you can just tap and pay.

3. Pagejacking

Pagejacking is a kind of credit card fraud where scammers create web pages and websites that look authentic. You may be tricked into making a purchase or executing a financial transaction on such fraudulent pages while giving the scammers free access to sensitive information about your credit card. 

How to avoid falling victim to pagejacking?

Ensure you only purchase from legitimate websites to avoid becoming a victim of credit card fraud due to pagejacking. You can also check the page's security and use search engines to look for cloned copies of the page online. 

4. Keystroke Logging

Keystroke logging is a kind of cyber fraud where the fraudster uses keylogging software to record the keystrokes made on your computer. The software is typically downloaded on your computer when you click a suspicious link. This, in turn, helps them identify the PIN, passwords, credit card numbers, and other such crucial details to execute a well mastered credit card fraud. 

How to avoid falling victim to keystroke logging frauds?

To avoid this kind of credit card fraud, ensure you do not click any unknown links on your computer. Check the list of downloaded software from time to time and uninstall any suspicious apps. Above all, use a reliable antivirus computer security software on your PC. 

5. Application Fraud

This type of credit card fraud is the second most common fraud, where scamsters impersonate genuine individuals to get them to use credit cards and use the fraudulently obtained cards to make purchases. Sometimes, scamsters may gain access to a valid credit card by impersonating a customer and using fake documents. This fraud can typically be detected if the issuing entity does a thorough background check.

Ways to Avoid Credit Card Fraud

Even though complete protection from credit card fraud is impossible, specific steps may be taken to minimise the risks, which are as follows.

  • Never provide personal or sensitive financial information to any suspicious email, phone call, or text.
  • Protect yourself against skimming by using an RFID-protection wallet.
  • Never allow a bystander or an employee to see your account and PIN when using an ATM in-store.
  • To prevent CNP-related frauds, check your residential mailbox regularly if you expect a credit card. Moreover, keep all financial statements with you securely so they're challenging to obtain.
  • Set up account alerts that automatically warn about suspicious transactions.
  • Never leave a credit card lying about; abstain from allowing any website to 'remember' the card number. 
  • ­Report stolen or lost cards immediately to avoid liabilities on any fraudulent charges on the card.
  • Constantly carefully scrutinise the monthly statement to identify suspicious or fraudulent account activity.

What to Do If You're a Victim of Credit Card Fraud?

If you're a victim of credit card fraud:

  • Contact your credit card company/bank/issuer and report the fraud.
  • File a police report.
  • Review your statements for additional unauthorised charges.
  • Change passwords and PINs.
  • Keep records of all communication.
  • Monitor your credit reports.
  • Cancel or deactivate your card and request a new card with a new number.
  • Cooperate with your issuer's investigation.
  • Be cautious in the future and consider credit monitoring services.

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The global menace of different types of credit card fraud is an alarming crime that requires much regulation and consideration. So that you know – the steps mentioned above will only help prevent and protect you from this hazard. Staying vigilant and promptly addressing credit card fraudulent signs is essential in preventing and mitigating credit card fraud. 

Frequently Asked Questions 

1. What are the common types of credit card fraud, and what methods do fraudsters use to steal credit card information?

Common types of credit card fraud include card-not-present fraud, card-present fraud, and account takeover. Fraudsters steal credit card information through phishing, skimming, data breaches, and online hacking.

2. How can people identify signs of credit card fraud on their accounts?

Signs of credit card fraud encompass unauthorized charges appearing on your statement, reporting a lost or stolen card, or receiving unfamiliar receipts from unknown merchants. Frequent transaction declines, especially for legitimate purchases, may indicate potential fraud. Beware of unsolicited calls or emails requesting your card information, alterations in your monthly statements or the unexpected arrival of new cards you didn't request. Your bank might alert you to unusual activity, and multiple failed login attempts on your card account can signal a security breach. 

3. What precautions should individuals take to safeguard their credit cards physically and digitally?

To safeguard credit cards physically and digitally, individuals should keep their cards secure, use strong PINs, report lost or stolen cards promptly, avoid sharing card details online or over the phone, regularly monitor statements, and use secure online shopping sites with HTTPS. Employing a credit monitoring service can provide an additional layer of protection. 

4. What are the best practices for secure online shopping to minimise the risk of credit card fraud?

For secure online shopping and to minimise the risk of credit card fraud, it's best to shop from reputable websites with secure payment methods, avoid public Wi-Fi networks, keep your devices and antivirus software updated, and regularly monitor your credit card statements for unauthorised transactions.

5. How should individuals manage their passwords and PINs to prevent credit card fraud?

To prevent credit card fraud, individuals should use strong, unique passwords, enable two-factor authentication, and avoid sharing or writing down PINs and passwords. Using a secure password manager for storing and generating passwords and vigilance against phishing attempts enhances online security. Regularly monitoring account activity and credit reports and keeping software and antivirus programs updated are essential safeguards against fraud.

6. What should someone do if they lose their credit card or suspect it has been stolen?

If you suspect you have been a credit card fraud victim, notify your bank immediately. You can even give a missed call on 14440 to register a complaint with the Reserve Bank of India. Your immediate priority should be to block your credit card in case it is lost or stolen or if you are receiving notifications of unauthorised transactions. This will ensure that the scamster cannot continue using your card. 


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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